Star Holdings (NASDAQ: STHO) widens Q1 2026 loss as asset sales rise
Star Holdings reported a wider net loss for the quarter ended March 31, 2026 as it continues monetizing legacy real estate and financial assets. Total revenue rose to $20.9 million from $14.6 million, driven mainly by higher land development sales and other income, including a legal settlement.
Costs increased faster than revenue, with interest expense, real estate operating costs, and depreciation pushing the company to a net loss of $14.5 million, or $(0.85) per share, compared with a $8.0 million loss a year earlier. Results also reflected a $2.2 million unrealized loss on its equity stake in Safehold Inc. as Safe’s share price declined in the period.
At quarter-end, Star Holdings had $480.4 million in total assets, including $183.0 million of Safehold stock and $62.1 million of cash and restricted cash, against $207.0 million of debt. The company continued its runoff strategy, selling land and development assets and repurchasing $2.0 million of its own shares while remaining in compliance with all debt covenants.
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Insights
Star Holdings shows rising revenue but deeper losses as it winds down assets.
Star Holdings increased quarterly revenue to $20.9 million, helped by land sales and other income, yet higher interest, operating costs, and depreciation produced a net loss of $14.5 million. The model remains a runoff of non-core real estate and lending assets.
Balance sheet strength leans heavily on its $183.0 million stake in Safehold Inc. and cash and restricted cash of $62.1 million as of March 31, 2026. Debt obligations total $207.0 million, primarily the Safe Credit Facility and Margin Loan Facility maturing in March 2028.
Management highlights interest rate, concentration and market risks, especially margin loan exposure to Safehold’s share price. Sensitivity disclosure shows a $0.3 million annual net income swing for a 100%-basis-point move in rates. Future filings will clarify how quickly asset sales, Safehold share decisions, and leverage reduction progress.
Key Figures
Key Terms
Margin Loan Facility financial
Safe Credit Facility financial
variable interest entity financial
available-for-sale debt securities financial
Management Agreement financial
loan-to-value ratios financial
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Consolidate
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to | |
Commission File No.
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(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification Number) |
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Registrant’s telephone number, including area code: (
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Shares of Beneficial Interest, $0.001 par value |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer | | Accelerated Filer | | Non accelerated Filer | | Smaller Reporting Company | | Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of May 6, 2026, there were
Table of Contents
TABLE OF CONTENTS
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PART I | Consolidated Financial Information | |
Item 1. | Financial Statements: | |
| Consolidated Balance Sheets (unaudited) as of March 31, 2026 and December 31, 2025 | 2 |
| Consolidated Statements of Operations (unaudited)—For the three months ended March 31, 2026 and 2025 | 3 |
| Consolidated Statements of Comprehensive Income (Loss) (unaudited)—For the three months ended March 31, 2026 and 2025 | 4 |
| Consolidated Statements of Changes in Equity (unaudited)—For the three months ended March 31, 2026 and 2025 | 5 |
| Consolidated Statements of Cash Flows (unaudited)—For the three months ended March 31, 2026 and 2025 | 6 |
| Notes to Consolidated Financial Statements (unaudited) | 7 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 21 |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 26 |
Item 4. | Controls and Procedures | 27 |
PART II | Other Information | 27 |
Item 1. | Legal Proceedings | 27 |
Item 1A. | Risk Factors | 28 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |
Item 3. | Defaults Upon Senior Securities | 28 |
Item 4. | Mine Safety Disclosures | 28 |
Item 5. | Other Information | 28 |
Item 6. | Exhibits | 29 |
SIGNATURES | 30 | |
Table of Contents
PART I. CONSOLIDATED FINANCIAL INFORMATION
Item 1. Financial Statements
Star Holdings
Consolidated Balance Sheets
(In thousands, except per share data)(1)
(unaudited)
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| | As of | ||||
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
ASSETS |
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Real estate |
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Real estate, at cost | | $ | | | $ | |
Less: accumulated depreciation | |
| ( | |
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Real estate, net | |
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Land and development, net | |
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Loans receivable and other lending investments, net ($ | |
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Other investments | |
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Cash | |
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Accrued interest and operating lease income receivable, net | |
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Deferred operating lease income receivable, net | |
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Deferred expenses and other assets, net | |
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Total assets | | $ | | | $ | |
LIABILITIES AND EQUITY | |
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Liabilities: | |
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Accounts payable, accrued expenses and other liabilities(2) | | $ | | | $ | |
Debt obligations, net | |
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Total liabilities | |
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Commitments and contingencies (refer to Note 10) | |
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Equity: | |
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Star Holdings shareholders' equity: | |
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Common Stock, $ | |
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Additional paid-in capital | |
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Accumulated deficit | |
| ( | |
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Accumulated other comprehensive income (loss) | |
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Star Holdings shareholders' equity | | | | | | |
Noncontrolling interests | |
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Total equity | |
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Total liabilities and equity | | $ | | | $ | |
| (1) |
| (2) |
The accompanying notes are an integral part of the consolidated financial statements.
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Star Holdings
Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
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| | For the Three Months Ended March 31, | ||||
| | 2026 | | 2025 | ||
Revenues: | | | |
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Operating lease income | | $ | | | $ | |
Interest income | |
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Other income(1) | |
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Land development revenue | |
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Total revenues | |
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Costs and expenses: | |
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Interest expense(2) | |
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Real estate expense(1) | |
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Land development cost of sales | |
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Depreciation and amortization | |
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General and administrative(3) | |
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Provision for (recovery of) loan losses | |
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Other expense | |
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Total costs and expenses | |
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Unrealized gains (losses) on equity investments | | | ( | | | |
Income (loss) from operations before other items and income taxes | |
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Loss on early extinguishment of debt, net | |
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Net income (loss) | | | ( | | | ( |
Net (income) loss from operations attributable to noncontrolling interests | |
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Net income (loss) allocable to common shareholders | | $ | ( | | $ | ( |
Per common share data: | |
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Net income (loss) allocable to common shareholders | |
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Basic and diluted | | $ | ( | | $ | ( |
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Weighted average number of common shares: | |
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Basic and diluted | |
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| (1) |
| (2) |
| (3) |
The accompanying notes are an integral part of the consolidated financial statements.
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Star Holdings
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(unaudited)
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| | For the Three Months Ended March 31, | ||||
| | 2026 | | 2025 | ||
Net income (loss) | | $ | ( | | $ | ( |
Other comprehensive income: | |
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Unrealized gains (losses) on available-for-sale securities | |
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Other comprehensive income (loss) | |
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Comprehensive income (loss) | |
| ( | |
| ( |
Comprehensive (income) loss attributable to noncontrolling interests | |
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Comprehensive income (loss) attributable to common shareholders | | $ | ( | | $ | ( |
The accompanying notes are an integral part of the consolidated financial statements.
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Star Holdings
Consolidated Statements of Changes in Equity
(In thousands)
(unaudited)
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| | | Common | | | Additional | | | | | Accumulated | | | | | | | | |
| | | Stock at | | | Paid-In | | | Accumulated | | Other Comprehensive | | | Noncontrolling | | | Total | ||
| | | Par | | | Capital | | | (Deficit) | | Income (Loss) | | | Interests | | | Equity | ||
Balance as of December 31, 2025 | | $ | | | $ | | | $ | ( | | $ | ( | | $ | | | | $ | |
Net income (loss) | |
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| ( | |
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Change in accumulated other comprehensive income (loss) | |
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Repurchase of stock | | | — | | | ( | | | — | | | — | | | — | | | | ( |
Change in noncontrolling interests (refer to Note 5) | |
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| — | |
| — | |
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Balance as of March 31, 2026 | | $ | | | $ | | | $ | ( | | $ | ( | | $ | | | | $ | |
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Balance as of December 31, 2024 | | $ | | | $ | | | $ | ( | | $ | ( | | $ | | | | $ | |
Net income (loss) | |
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Change in accumulated other comprehensive income (loss) | |
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Change in noncontrolling interests | | | — | | | — | | | — | | | — | | | | | | | |
Balance as of March 31, 2025 | | $ | | | $ | | | $ | ( | | $ | ( | | $ | | | | $ | |
The accompanying notes are an integral part of the consolidated financial statements.
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Star Holdings
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
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| | For the Three Months Ended March 31, | ||||
| | 2026 | | 2025 | ||
Cash flows from operating activities: | | | |
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Net income (loss) | | $ | ( | | $ | ( |
Adjustments to reconcile net income (loss) to cash flows from operating activities: | |
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Provision for (recovery of) loan losses | |
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Depreciation and amortization | |
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Amortization of discounts/premiums and deferred interest on loans, net | |
| ( | |
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Amortization of premium, discount and deferred financing costs and paid-in-kind interest on debt obligations, net | | | | | | |
Deferred operating lease income | |
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Unrealized (gains) losses on equity investments | | | | | | ( |
Loss on early extinguishment of debt | |
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Land development revenue (in excess of) cost of sales | |
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Other operating activities, net | |
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Changes in assets and liabilities: | |
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Changes in accrued interest and operating lease income receivable | |
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Changes in deferred expenses and other assets, net | |
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Changes in accounts payable, accrued expenses and other liabilities | |
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Cash flows used in operating activities | |
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Cash flows from investing activities: | |
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Originations and fundings of loans receivable and other lending investments, net | |
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Capital expenditures on real estate assets | |
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Capital reimbursements (expenditures) on land and development assets, net | |
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Repayments of and principal collections on loans receivable and other lending investments, net | |
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Net proceeds from sales of land and development assets | |
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Cash and restricted cash disposed upon deconsolidation of venture (refer to Note 5) | | | ( | | | — |
Other investing activities, net | |
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Cash flows provided by (used in) investing activities | |
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Cash flows from financing activities: | |
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Borrowings from debt obligations | |
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Repayments of debt obligations | | | — | | | ( |
Payment of deferred financing costs | | | ( | | | — |
Payments of debt prepayment or extinguishment costs | |
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Repurchase of common stock | | | ( | | | — |
Other financing activities, net | |
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Cash flows provided by (used in) financing activities | |
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Changes in cash and restricted cash | |
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Cash and restricted cash at beginning of period | |
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Cash and restricted cash at end of period | | $ | | | $ | |
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Reconciliation of cash and restricted cash presented on the consolidated statements of cash flows | | | | | | |
Cash | | $ | | | $ | |
Restricted cash included in deferred expenses and other assets, net | | | | | | |
Total cash and restricted cash | | $ | | | $ | |
The accompanying notes are an integral part of the consolidated financial statements.
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Star Holdings
Notes to Consolidated Financial Statements
(unaudited)
Note 1—Business and Organization
Star Holdings is a Maryland statutory trust (the "Company," "Star Holdings," "we" or "us") that was spun-off from iStar Inc. (“iStar”) on March 31, 2023 (the Spin-Off”). The Company was formed to hold and seek to monetize iStar’s legacy non-ground lease assets. The Company operates its business as
Note 2—Basis of Presentation and Principles of Consolidation
Basis of Presentation—The accompanying unaudited consolidated financial statements have been prepared in conformity with the instructions to Form 10-Q and Article 10-01 of Regulation S-X for interim financial statements. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. These unaudited consolidated financial statements and related notes should be read in conjunction with the combined and consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K (the “2025 Annual Report”) for the year ended December 31, 2025.
The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Certain prior year amounts have been reclassified in the Company's consolidated financial statements and the related notes to conform to the current period presentation.
In the opinion of management, the accompanying consolidated financial statements contain all adjustments consisting of normal recurring adjustments necessary for a fair statement of the results for the interim periods presented. Such operating results may not be indicative of the expected results for any other interim periods or the entire year.
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
Principles of Consolidation—The consolidated financial statements include the accounts and operations of the Company, its wholly-owned subsidiaries and VIEs for which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
Consolidated VIEs—The Company consolidates VIEs for which it is considered the primary beneficiary. The liabilities of these VIEs are non-recourse to the Company and can only be satisfied from each VIE’s respective assets. The Company did not have any unfunded commitments related to consolidated VIEs as of March 31, 2026 and December 31, 2025.
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| | As of | ||||
| | March 31, 2026 | | December 31, 2025 | ||
ASSETS | | | |
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Real estate | | | |
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Real estate, at cost (refer to Note 4 and Note 5) | | $ | | | $ | |
Less: accumulated depreciation | |
| ( | |
| ( |
Real estate, net | |
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Land and development, net | |
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Cash | |
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Deferred expenses and other assets, net | |
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Total assets | | $ | | | $ | |
LIABILITIES | |
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Total liabilities | | $ | | | $ | |
Note 3—Summary of Significant Accounting Policies
The Company’s significant accounting policies have not changed materially from those described in the 2025 Annual Report. Please refer to the 2025 Annual Report for the Company’s significant accounting policies.
New accounting pronouncements—In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update 2024-03, “Disaggregation of Income Statement Expenses” (“ASU 2024-03”). ASU 2024-03 requires disclosure of additional information about specific cost and expense categories in the notes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating ASU 2024-03 but does not expect this standard to have a material impact on its consolidated financial statements.
Note 4—Real Estate
The Company’s real estate assets were comprised of the following ($ in thousands):
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| | As of | ||||
| | March 31, 2026 | | December 31, 2025 | ||
Land, at cost | | $ | | | $ | |
Buildings and improvements, at cost(1) | |
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Less: accumulated depreciation(1) | |
| ( | |
| ( |
Real estate, net | | $ | | | $ | |
| (1) | In March 2026, a real estate asset was deconsolidated when a mezzanine loan provided by the Company was repaid in full and the Company’s senior loan guaranties were released by the lender (refer to Note 5). |
Tenant Reimbursements—The Company receives reimbursements from tenants for certain facility operating expenses including common area costs, insurance, utilities and real estate taxes. Tenant reimbursements were $
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
and $
Allowance for Doubtful Accounts—As of March 31, 2026 and December 31, 2025, the allowance for doubtful accounts related to real estate tenant receivables was $
Future Minimum Operating Lease Payments—Future minimum operating lease payments to be collected under non-cancelable operating leases, excluding tenant reimbursements of expenses, in effect as of March 31, 2026, are as follows by year ($ in thousands):
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Year | | Amount | |
2026 (remaining nine months) | | $ | |
2027 | |
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2028 | |
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2029 | |
| — |
2030 | |
| — |
Thereafter | |
| — |
Note 5—Land and Development
The Company’s land and development assets were comprised of the following ($ in thousands):
| | | | | | |
| | As of | ||||
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
Land and land development, at cost | | $ | | | $ | |
Less: accumulated depreciation | |
| ( | |
| ( |
Total land and development, net | | $ | | | $ | |
Dispositions—During the three months ended March 31, 2026 and 2025, the Company sold land parcels and residential lots and units and recognized land development revenue of $
In December 2023, the Company transferred the ownership interests in a subsidiary land owner to a third-party venture (the “Venture”) for the development and construction of a multifamily project in Asbury Park, NJ (the “Project”). In connection with this transfer, the Company (i) provided the Venture with a $
At closing, the Company determined that the Venture (and its consolidated subsidiaries developing the Project) was a VIE for which the Company was the primary beneficiary and thus consolidated it under ASC 810. As a result, for accounting purposes, the Project was recorded on the Company’s consolidated financial statements and the mezzanine loan eliminated in consolidation prior to the mezzanine loan being repaid. The Company deconsolidated the Venture in March 2026 when the mezzanine loan was repaid in full and the Company’s senior loan guaranties were released by the lender. The Company recorded $
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
interest, and $
Note 6—Loans Receivable and Other Lending Investments, net
The following is a summary of the Company’s loans receivable and other lending investments by class ($ in thousands): (1)
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| | As of | ||||
| | March 31, 2026 | | December 31, 2025 | ||
Loans | |
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Senior mortgages | | $ | | | $ | |
Subordinate mortgages | |
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Subtotal - gross carrying value of loans | |
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Other lending investments | |
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Available-for-sale debt securities | |
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Subtotal - other lending investments | |
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Total gross carrying value of loans receivable and other lending investments | |
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Allowance for loan losses | |
| ( | |
| ( |
Total loans receivable and other lending investments, net | | $ | | | $ | |
| (1) | As of March 31, 2026 and December 31, 2025, accrued interest was $ |
Allowance for Loan Losses—Changes in the Company’s general allowance for loan losses were as follows for the three months ended March 31, 2026 and 2025 ($ in thousands):
| | | |
Three Months Ended March 31, 2026 | | | |
Allowance for loan losses at beginning of period | | $ | |
Provision for (recovery of) loan losses(1) | |
| |
Charge-offs | |
| ( |
Allowance for loan losses at end of period | | $ | |
| | | |
Three Months Ended March 31, 2025 | | | |
Allowance for loan losses at beginning of period | | $ | |
Provision for (recovery of) loan losses(1) | |
| ( |
Allowance for loan losses at end of period | | $ | |
| (1) | During the three months ended March 31, 2026 and 2025, the Company recorded a provision for (recovery of) loan losses of $ |
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
Credit Characteristics—As part of the Company’s process for monitoring the credit quality of its loans, it performs a quarterly loan portfolio assessment and assigns risk ratings to each of its performing loans. Risk ratings, which range from 1 (lower risk) to 5 (higher risk), are based on judgments which are inherently uncertain, and there can be no assurance that actual performance will be similar to current expectation. The Company designates loans as non-performing at such time as: (1) interest payments become 90 days delinquent; (2) the loan has a maturity default; or (3) management determines it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan. All non-performing loans are placed on non-accrual status and income is only recognized in certain cases upon actual cash receipt.
As of March 31, 2026 and December 31, 2025, all of the Company’s loans were current in their payment status and had a risk rating of 3.
Other lending investments—Other lending investments includes the following securities ($ in thousands):
| | | | | | | | | | | | | | | |
| | | | | | | | Net | | | | | Net | ||
| | | | | Amortized | | Unrealized | | Estimated | | Carrying | ||||
| | Face Value | | Cost Basis | | Gain (Loss) | | Fair Value | | Value | |||||
As of March 31, 2026 |
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Available-for-sale securities |
| | | | | | | | | | | | | | |
Municipal debt securities(1) | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Total | | $ | | | $ | | | $ | ( | | $ | | | $ | |
As of December 31, 2025 | |
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Available-for-Sale Securities | |
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| | |
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Municipal debt securities(1) | | $ | | | $ | | | $ | ( | | $ | | | $ | |
Total | | $ | | | $ | | | $ | ( | | $ | | | $ | |
| (1) | As of March 31, 2026, the Company had |
As of March 31, 2026, the contractual maturities of the Company’s securities were as follows ($ in thousands):
| | | | | | |
| | Amortized | | Estimated | ||
| | Cost Basis | | Fair Value | ||
Maturities |
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Within one year | | $ | — | | $ | — |
After one year through 5 years | |
| — | |
| — |
After 5 years through 10 years | |
| — | |
| — |
After 10 years | |
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| |
Total | | $ | | | $ | |
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
Note 7—Other Investments
The Company’s “other investments” is its investment in Safehold Inc. (“Safe”). Safe is a publicly-traded company that acquires, owns, manages, finances and capitalizes ground leases. Ground leases generally represent ownership of the land underlying commercial real estate projects that is net leased by the fee owner of the land to the owners/operators of the real estate projects built thereon (“Ground Leases”). As of March 31, 2026, the Company owned approximately
As of March 31, 2026, the Company’s investment in Safe had a market value of $
On March 31, 2023, the Company entered into the following agreements with Safe:
Separation and Distribution Agreement—The Separation and Distribution Agreement contains certain provisions governing Star Holdings' relationship with Safe with respect to and following the Spin-Off. The Separation and Distribution Agreement includes provisions allocating assets and liabilities between Star Holdings and Safe and various post-closing covenants relating to, among other things, the treatment of the parties’ insurance policies, information sharing and other operational matters. The Separation and Distribution Agreement includes a mutual release by Star Holdings, on the one hand, and Safe, on the other hand, of the other party from certain specified liabilities, as well as mutual indemnification covenants pursuant to which Star Holdings and Safe have agreed to indemnify each other from certain specified liabilities.
Management Agreement—The Company entered into the Management Agreement with Safehold Management Services Inc. (the “Manager”), a subsidiary of Safe. The Management Agreement requires the Manager to manage the Company’s assets and its and its subsidiaries’ day-to-day operations, subject to the supervision of Board of Trustees of the Company (the “Board”). Pursuant to the Management Agreement, the Manager is required to provide the Company with a management team, including a chief executive officer, a chief financial officer and a chief compliance officer, along with support personnel, to provide the management services to be provided by the Manager to the Company. The Manager does not assume any responsibility other than to render the services called for thereunder and is not responsible for any action of the Board in following or declining to follow its advice or recommendations.
The Management Agreement has an annual term that automatically renews on March 31 of each year. The Company pays a fixed cash management fee and reimburses the Manager for third party expenses incurred in connection with its services. The Company paid the Manager management fees of $
The Management Agreement may be terminated by the Company without cause by not less than
In the event of a termination without cause by the Company prior to March 31, 2027, the Company will pay the Manager a termination fee of $
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
termination date, the termination fee will consist of any portion of the annual management fee that remained unpaid for the remainder of the then current annual term.
On March 28, 2025, the Company and certain of its subsidiaries entered into amendments to the Management Agreement, the Safe Credit Facility (refer to Note 9) and the Margin Loan Facility (refer to Note 9). The foregoing description of certain terms of the Management Agreement reflects the amendment to the Management Agreement which increased the management fee payable in year four of the contract from $
Governance Agreement—The Company and Safe entered into a governance agreement (the “Governance Agreement”) in order to establish various arrangements and restrictions with respect to the governance of the Company and certain rights and restrictions with respect to the Safe Shares owned by the Company.
The Company and its subsidiaries are prohibited from transferring at any time any Safe Shares held by the Company or its subsidiaries to any person who is known by the Company or its subsidiaries to be an “Activist” or “Company Competitor” (as such terms are defined in the Governance Agreement), or to any group that, to the knowledge of the Company or its subsidiaries, includes as “Activist” or “Company Competitor,” without first obtaining the Safe’s prior written consent.
During a “restrictive period” which lasts until the earliest to occur of (i) the effective date on which Safe terminates the Management Agreement; or (ii) the date on which the Company beneficially own less than
Registration Rights Agreement—Under the Registration Rights Agreement, Safe has agreed to (i) register Star Holdings' shares of Safe common stock and the other registrable securities for resale by filing and maintaining a shelf registration statement; (ii) file a registration statement covering Star Holdings' shares of Safe common stock and other registrable securities pursuant to the demand right and (iii) allow Star Holdings to piggyback on certain other registration statements filed by Safe. Star Holdings may use the registration rights to sell its shares of Safe common stock in underwritten offerings, block trades and other methods of distribution. Star Holdings will be subject to certain suspension and lockup obligations. Star Holdings' registration rights will end, among other times, when it owns less than
Safe Credit Facility—Refer to Note 9 for additional information on the Safe Credit Facility.
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
Note 8—Other Assets and Other Liabilities
Deferred expenses and other assets, net, consist of the following items ($ in thousands):
| | | | | | | |
| | As of | | ||||
| | March 31, 2026 | | December 31, 2025 | | ||
Other assets(1) | | $ | | | $ | | |
Operating lease right-of-use assets(2) | |
| | |
| | |
Restricted cash | |
| | |
| | |
Other receivables | |
| | |
| | |
Leasing costs, net(3) | |
| | |
| | |
Intangible assets, net(4) | | | | | | | |
Deferred expenses and other assets, net | | $ | | | $ | | |
| (1) | As of March 31, 2026 and December 31, 2025, other assets primarily includes prepaid expenses and dividends receivable from Safe. |
| (2) | Right-of use lease assets initially equal the lease liability. For operating leases, rent expense is recognized on a straight-line basis over the term of the lease and is recorded in “Real estate expense” in the Company’s consolidated statements of operations. During the three months ended March 31, 2026 and 2025, the Company recognized $ |
| (3) | Accumulated amortization of leasing costs was $ |
| (4) | Intangible assets, net includes above market and in-place lease assets related to the acquisition of real estate assets. Accumulated amortization on intangible assets, net was $ |
Accounts payable, accrued expenses and other liabilities consist of the following items ($ in thousands):
| | | | | | | |
| | As of | | ||||
| | March 31, 2026 | | December 31, 2025 | | ||
Other liabilities(1) | | $ | | | $ | | |
Accrued expenses | | | | | | | |
Operating lease liabilities (see table above) | |
| | |
| | |
Accounts payable, accrued expenses and other liabilities | | $ | | | $ | | |
| (1) | As of March 31, 2026, “Other liabilities” includes $ |
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
Note 9—Debt Obligations, net
The Company’s debt obligations were as follows ($ in thousands):
| | | | | | | | | | |
| | Carrying Value as of | | Stated | | Scheduled | ||||
| | March 31, 2026 | | December 31, 2025 | | Interest Rates | | Maturity Date(1) | ||
Debt obligations: |
| | |
| | | | |
| |
Safe Credit Facility | | $ | | | $ | | | % | March 2028 | |
Margin Loan Facility(2) | |
| | |
| | | SOFR plus | % | March 2028 |
Senior Construction Mortgage Loan(3) | | | — | | | | | — | | — |
Total debt obligations | |
| | |
| | | |
| |
Debt discounts and deferred financing costs, net | |
| ( | |
| ( | | |
| |
Total debt obligations, net(4) | | $ | | | $ | | | |
| |
| (1) | Represents the extended maturity date. |
| (2) | The Company has the option to pay interest in kind (“PIK”) on its quarterly interest payments and such PIK is added to the principal balance on the Margin Loan Facility. The applicable margin on the Margin Loan Facility increases by |
| (3) | Refer to Note 5. |
| (4) | During the three months ended March 31, 2026 and 2025, the Company capitalized interest expense on qualifying real estate assets of $ |
Future Scheduled Maturities—As of March 31, 2026, future scheduled maturities of outstanding debt obligations, assuming all extensions that can be exercised at the Company’s option, are as follows ($ in thousands):
| | | |
2026 (remaining nine months) | | $ | — |
2027 | |
| — |
2028 | |
| |
2029 | |
| — |
2030 | |
| — |
Thereafter | |
| — |
Total principal maturities | |
| |
Unamortized discounts and deferred financing costs, net | |
| ( |
Total debt obligations, net | | $ | |
Safe Credit Facility—In connection with the Spin-Off, on March 31, 2023, the Company, as borrower, entered into a credit agreement with Safe for a secured term loan with an outstanding principal amount of $
Interest on borrowings under the Safe Credit Facility is payable in cash and accrues interest at a rate of (x)
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
Facility at such time,
During the three months ended March 31, 2026 and 2025, the Company incurred $
Margin Loan Facility—On March 31, 2023, STAR Investment Holdings SPV LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company ("STAR SPV"), as borrower, entered into a margin loan agreement providing for a
Interest on the Margin Loan Facility is payable in cash; provided, that STAR SPV may, at its option, elect that the interest for any future interest period be paid-in-kind. Amounts outstanding under the Margin Loan Facility accrue interest at a rate equal to term SOFR for a three-month tenor plus a spread. Amounts outstanding under the Margin Loan Facility may be prepaid at any time upon prior notice, in whole or in part, subject to the payment of any applicable make-whole amount.
Senior Construction Mortgage Loan—In December 2023, the Venture (refer to Note 5) entered into an $
Debt Covenants—The Safe Credit Facility requires that the Company comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, indebtedness, liens, investments, mergers, asset sales and the payment of certain dividends. Additionally, the Safe Credit Facility includes customary representations and warranties as well as customary events of default, the occurrence of which, following any applicable grace period, would permit New Safe to, among other things, declare the principal, accrued interest and other obligations of the Company under the Safe Credit Facility to be immediately due and payable and foreclose on the collateral securing the Safe Credit Facility.
The Margin Loan Facility requires that STAR SPV comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, indebtedness, liens, investments and the payment of dividends. Additionally, the Margin Loan Facility includes customary representations and warranties, events of default and other creditor protections for this type of facility. Upon the occurrence of certain events which are customary for this type of facility, STAR SPV may be required to prepay all amounts due under the Margin Loan Facility or post additional collateral in accordance with the Margin Loan Facility and related agreements.
As of March 31, 2026, the Company was in compliance with all of its financial covenants.
Note 10—Commitments and Contingencies
Legal Proceedings—The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to the Company’s business as a finance and
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
investment company focused on the commercial real estate industry, including foreclosure-related proceedings. The Company believes it is not a party to, nor are any of its properties the subject of, any pending legal proceeding that would have a material adverse effect on the Company’s consolidated financial statements.
Note 11—Risk Management
Risk management
In the normal course of its on-going business operations, the Company encounters economic risk. There are three main components of economic risk: interest rate risk, credit risk and market risk. The Company is subject to interest rate risk to the degree that its interest-bearing liabilities mature or reprice at different points in time and potentially at different bases, than its interest-earning assets. Credit risk is the risk of default on the Company’s lending investments or leases that result from a borrower’s or tenant’s inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of loans and other lending investments due to changes in interest rates or other market factors, including the rate of prepayments of principal and the value of the collateral underlying loans, the valuation of real estate assets by the Company as well as changes in foreign currency exchange rates.
Risk concentrations—Concentrations of credit risks arise when a number of borrowers, tenants or investees related to the Company’s investments are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations, including those to the Company, to be similarly affected by changes in economic conditions.
All of the Company’s real estate and assets collateralizing its loans receivable are located in the United States. As of March 31, 2026, the Company’s portfolio contains concentrations in the following property types: entertainment/leisure, land and development, hotel, retail and the Safe Shares.
The Company underwrites the credit of prospective borrowers and tenants and often requires them to provide some form of credit support such as corporate guarantees, letters of credit and/or cash security deposits. Although the Company’s loans and real estate assets are geographically diverse and the borrowers and tenants operate in a variety of industries, to the extent the Company has a significant concentration of interest or operating lease revenues from any single borrower or tenant, the inability of that borrower or tenant to make its payment could have a material adverse effect on the Company. In addition, declines in the market price of Safe common stock could require the Company to post additional collateral or prepay some or all of the outstanding borrowings under the Margin Loan Facility.
Note 12—Equity
Common Stock—On March 31, 2023, in connection with the Spin-Off, iStar distributed
Accumulated Other Comprehensive Income (Loss)— “Accumulated other comprehensive income (loss)” reflected in the Company’s shareholders’ equity is comprised of unrealized gains or losses on the Company’s available-for-sale securities.
Share Repurchase Program—The Company initiated a share repurchase program in March 2025 that permitted the Company to repurchase up to $
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
pricing conditions, applicable law and other factors deemed relevant in the Company's sole discretion. During the three months ended March 31, 2026, the Company repurchased
Note 13—Earnings Per Share
The following table presents a reconciliation of income from operations used in the basic and diluted earnings per share (“EPS”) calculations ($ in thousands, except for per share data):
| | | | | | |
| | For the Three Months Ended March 31, | ||||
| | 2026 | | 2025 | ||
Net income (loss) | | $ | ( | | $ | ( |
Net (income) loss from operations attributable to noncontrolling interests | |
| | |
| |
Net income (loss) allocable to common shareholders | | $ | ( | | $ | ( |
| | | | | | |
| | For the Three Months Ended March 31, | ||||
| | 2026 | | 2025 | ||
Earnings allocable to common shares: | | | |
| | |
Numerator for basic and diluted earnings per share: | | | |
| | |
Net income (loss) allocable to common shareholders | | $ | ( | | $ | ( |
| | | | | | |
Denominator for basic and diluted earnings per share: | |
| | |
| |
Weighted average common shares outstanding for basic and diluted earnings per common share | |
| | |
| |
| | | | | | |
Basic and diluted earnings per common share: | |
| | |
| |
Net income (loss) allocable to common shareholders | | $ | ( | | $ | ( |
Note 14—Fair Values
Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs to be used in valuation techniques to measure fair value:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
Certain of the Company’s assets and liabilities are recorded at fair value either on a recurring or non-recurring basis. Assets required to be marked-to-market and reported at fair value every reporting period are classified as being valued on a recurring basis. Assets not required to be recorded at fair value every period may be recorded at fair value if a specific provision or other impairment is recorded within the period to mark the carrying value of the asset to market as of the reporting date. Such assets are classified as being valued on a non-recurring basis.
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
The following fair value hierarchy table summarizes the Company’s assets recorded at fair value on a recurring basis by the above categories as of March 31, 2026 and December 31, 2025 ($ in thousands):
| | | | | | | | | | | | |
| | Fair Value Using | ||||||||||
| | | | | Quoted | | | | | | | |
| | | | | market | | Significant | | | | ||
| | | | | prices in | | other | | Significant | |||
| | | | | active | | observable | | unobservable | |||
| | | | | markets | | inputs | | inputs | |||
| | Total | | (Level 1) | | (Level 2) | | (Level 3) | ||||
As of March 31, 2026 | | | | | | | | | | | | |
Available-for-sale debt securities(1) | | $ | | | $ | — | | $ | — | | $ | |
Other investments (refer to Note 7) | | | | | | | | | — | | | — |
| | | | | | | | | | | | |
As of December 31, 2025 |
| | |
| | |
| | |
| | |
Available-for-sale debt securities(1) | | $ | | | $ | — | | $ | — | | $ | |
Other investments (refer to Note 7) | |
| | | | | | | — | | | — |
| (1) | The fair value of the Company’s available-for-sale debt securities are based upon unadjusted third-party broker quotes and are classified as Level 3. |
The following table summarizes changes in Level 3 available-for-sale securities reported at fair value on the Company’s consolidated balance sheets for the three months ended March 31, 2026 and 2025 ($ in thousands):
| | | | | | |
| | Three Months Ended March 31, | ||||
| | 2026 | | 2025 | ||
Beginning balance | | $ | | | $ | |
Repayments | | | ( | | | ( |
Purchases | | | | | | — |
Unrealized gain (loss) recorded in other comprehensive income (loss) | |
| ( | |
| ( |
Ending balance | | $ | | | $ | |
Fair values of financial instruments—The following table presents the carrying value and fair value for the Company’s financial instruments ($ in millions):
| | | | | | | | | | | | |
| | As of March 31, 2026 | | As of December 31, 2025 | ||||||||
| | Carrying | | Fair | | Carrying | | Fair | ||||
| | Value | | Value | | Value | | Value | ||||
Assets | | | | | | | | | | | | |
Loans receivable and other lending investments, net(1) | | $ | | | $ | | | $ | | | $ | |
Cash(2) | |
| | |
| | |
| | |
| |
Restricted cash(2) | |
| | |
| | |
| | |
| |
| | | | | | | | | | | | |
Liabilities | | | | | | | | | | | | |
Debt obligations, net(1) | | | | | | | | | | | | |
| (1) | The fair value of the Company’s loans receivable and other lending investments, net and debt obligations are classified as Level 3 within the fair value hierarchy. |
| (2) | The Company determined the carrying values of its cash and restricted cash approximated their fair values. Restricted cash is recorded in “Deferred expenses and other assets, net” on the Company’s balance sheet. The fair value of the Company’s cash and restricted cash are classified as Level 1 within the fair value hierarchy. |
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Star Holdings
Notes to Consolidated Financial Statements (Continued)
(unaudited)
Note 15—Segment Reporting
The Company operates its business through
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are included with respect to, among other things, Star Holdings’ (the “Company’s”) current business plan, business strategy, portfolio management, prospects and liquidity. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results or outcomes to differ materially from those contained in the forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In assessing all forward-looking statements, readers are urged to read carefully all cautionary statements contained in this Form 10-Q and the uncertainties and risks described in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), all of which could affect our future results of operations, financial condition and liquidity. For purposes of Management’s Discussion and Analysis of Financial Condition and Results of Operations, the terms “we,” “our” and “us” refer to Star Holdings and its consolidated subsidiaries, unless the context indicates otherwise.
The discussion below should be read in conjunction with our consolidated financial statements and related notes in this quarterly report on Form 10-Q and our 2025 Annual Report. These historical financial statements may not be indicative of our future performance.
Our Development Portfolio
Asbury Park Waterfront
We are the managing member in Asbury Partners, LLC, which is the joint venture that owns the Asbury Park Waterfront investment. The aggregate carrying value of the Asbury Park Waterfront investment was approximately $122.8 million as of March 31, 2026.
The Asbury Park Waterfront investment includes the following:
| ● | Asbury Ocean Club Surfside Resort and Residences: a 16-story mixed use project featuring 130 residential condominium units, a 54-key luxury boutique hotel, 24,000 square feet of retail space, 410 structured parking spaces and a 15,000 square foot gym and spa amenity area. The property was completed in 2019. The hotel is managed by a third party. As of March 31, 2026, all residential condominium units have been sold. |
| ● | The Asbury: a 110-key independent boutique hotel with indoor and outdoor event spaces, and a rooftop bar. The hotel was completed in 2016 and is managed by a third party. |
| ● | Asbury Lanes: a 12,000 square foot music and entertainment venue. The venue was completed in 2018, is connected to The Asbury and managed by a third party. |
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In addition to the operating assets, we also own remaining development sites. Our current strategy for the Asbury Park Waterfront investment is to actively asset manage our operating assets, and strategically monetize the remaining development sites and our operating assets through sales to third party developers and operators while meeting our obligations under the redevelopment agreement with the city of Asbury Park.
Magnolia Green
Magnolia Green is an approximately 1,900 acre multi-generational master planned residential community that is entitled for 3,550 single and multifamily dwelling units and approximately 193 acres of land for commercial development. The community is located 19 miles southwest of Richmond, Virginia and offers distinct phases designed for people in different life stages, from first home buyers to empty nesters in single family and townhomes built by the area’s top homebuilders. The project is anchored by the Magnolia Green Golf Club, a semi-private 18-hole Nicklaus Design championship golf course with full-service clubhouse and driving range. There are also numerous community amenities, including the Aquatic Center, featuring multiple pools and a snack bar, Arbor Walk, featuring a junior Olympic competition pool, water slide and sports courts, the Tennis Center, featuring tennis and pickleball courts and a pro shop, and miles of paved trails. The aggregate carrying value of our Magnolia Green assets as of March 31, 2026 was $30.8 million.
As of March 31, 2026, 2,240 residential lots have been sold to homebuilders. We anticipate selling our remaining residential lots to homebuilders either upon completion of horizontal lot development or in bulk as unimproved lots. We currently expect such sales to occur over the next two years; however, it could take substantially longer. We anticipate selling the golf course operations to a third party upon completion of residential lot sellout. There can be no assurance, however, that these sales will be completed.
Our Monetizing Portfolio
As of March 31, 2026, we owned assets that we expect to monetize primarily through asset sales, loan repayments or active asset management. These assets had an aggregate carrying value of approximately $71.5 million and were comprised primarily of loans and other lending investments, operating properties, land and other assets. Summarized information regarding these assets is set forth below.
Loans and other lending investments. The loans and other lending investments included in our monetizing portfolio as of March 31, 2026 includes one loan with a carrying value of $16.1 million and ten available-for-sale debt securities with an aggregate carrying value of $38.2 million.
Land. The land asset included in our portfolio as of March 31, 2026 has a carrying value of approximately $14.4 million. Our general strategy is to seek to sell the land to third party developers.
Other. The remainder of the monetizing assets primarily consist of two properties which had an aggregate carrying value of $2.7 million as of March 31, 2026 a group of loans and equity interests that are recorded as having no carrying value in our financial statements. Both properties are leased to us under short term leases and one is subleased by us to a third party. Our general strategy is to monetize the leased assets, although we may hold them until lease expiration. For the assets with no carrying value, we may seek to sell these assets but can give no assurance that we will recover any value from them
Investment in Safe. In addition to the assets described above, we also own the Safe Shares which had a fair value of $183.0 million based on the closing price of $13.53 as of March 31, 2026. Our Margin Loan Facility is collateralized by the Safe Shares as of the date of this filing. The net proceeds from the sale of any Safe Shares must be applied in accordance with the terms of the Margin Loan Facility.
Declines in the market value of the Safe Shares could require us to make prepayments of some or all of the outstanding borrowings under the Margin Loan Facility or post additional cash collateral. Accessing incremental
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borrowings under the Safe Credit Facility will increase our interest expense because the interest rate on all borrowings increases to 10.0% per annum while incremental borrowings remain outstanding.
Results of Operations for the Three Months Ended March 31, 2026 compared to the Three Months Ended March 31. 2025
| | | | | | | | | |
| | For the Three Months Ended | | | | ||||
| | March 31, | | | | ||||
| | 2026 | | 2025 | | $ Change | |||
| | (in thousands) | |||||||
Operating lease income | | $ | 2,037 | | $ | 1,854 | | $ | 183 |
Interest income | |
| 497 | |
| 1,099 | |
| (602) |
Other income | |
| 7,392 | |
| 6,488 | |
| 904 |
Land development revenue | |
| 11,015 | |
| 5,183 | |
| 5,832 |
Total revenue | |
| 20,941 | |
| 14,624 | |
| 6,317 |
Interest expense | |
| 6,088 | |
| 3,763 | |
| 2,325 |
Real estate expense | |
| 11,507 | |
| 9,694 | |
| 1,813 |
Land development cost of sales | |
| 9,342 | |
| 6,827 | |
| 2,515 |
Depreciation and amortization | |
| 2,228 | |
| 977 | |
| 1,251 |
General and administrative | |
| 3,286 | |
| 4,718 | |
| (1,432) |
Provision for (recovery of) loan losses | |
| 419 | |
| (137) | |
| 556 |
Other expense | |
| 365 | |
| 3 | |
| 362 |
Total costs and expenses | |
| 33,235 | |
| 25,845 | |
| 7,390 |
Unrealized gain (loss) on equity investment | | | (2,164) | | | 3,245 | | | (5,409) |
Loss on early extinguishment of debt | | | — | |
| (70) | |
| 70 |
Net income (loss) | | $ | (14,458) | | $ | (8,046) | | $ | (6,412) |
Revenue—Operating lease income, which primarily includes income from commercial operating properties, was $2.0 million and $1.9 million, respectively, during the three months ended March 31, 2026 and 2025. The increase in 2026 was due primarily to one property beginning operations in September 2025, which was partially offset by a lease expiration in December 2025.
Interest income decreased to $0.5 million for the three months ended March 31, 2026 from $1.1 million for the same period in 2025. The decrease in interest income was due primarily to a decrease in the average balance of our performing loans and other lending investments due to loan repayments.
Other income increased to $7.4 million during the three months ended March 31, 2026 from $6.5 million for the same period in 2025. Other income consists primarily of dividend income from our investment in Safe and income from our hotel properties and other operating properties, including Asbury Lanes and the Magnolia Green Golf Club, and other ancillary income. The increase in other income in 2026 was due primarily to $1.0 million related to a legal settlement with respect to one of iStar’s (refer to Note 1 to the consolidated financial statements) legacy assets. This amount was recorded upon settlement due to uncertainty regarding collectability of the funds and represents the gross amount of the settlement.
Land development revenue and cost of sales—During the three months ended March 31, 2026, we sold residential lots and units and recognized land development revenue of $11.0 million which had associated cost of sales of $9.3 million. During the three months ended March 31, 2025, we sold residential lots and recognized land development revenue of $5.2 million which had associated cost of sales of $6.8 million. The increase in 2026 was primarily due to a bulk sale at our Asbury Park property in 2026 (refer to Note 5 to the consolidated financial statements). As we execute future sales and have fewer remaining residential and development assets, we expect our land development revenue will decline. The timing and amount of such sales cannot be predicted with certainty.
Costs and expenses—For the three months ended March 31, 2026, we incurred $2.3 million of interest expense on the Safe Credit Facility, $1.7 million of interest expense on our Margin Loan Facility, net of amounts capitalized and $2.1 million on the Loan (refer to Note 9 to the consolidated financial statements). We may elect to pay interest
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in kind ("PIK") on the Margin Loan Facility in respect of certain quarterly interest payments and such PIK has been added to the principal balance on the Margin Loan Facility. The applicable margin on the Margin Loan Facility increases by 25 basis points for the entirety of the interest period immediately succeeding any interest period with respect to which we make a PIK election. For the three months ended March 31, 2025, we incurred $2.2 million of interest expense on the Safe Credit Facility and $1.6 million of interest expense on our Margin Loan Facility, net of amounts capitalized.
Real estate expense was $11.5 million during the three months ended March 31, 2026 and $9.7 million for the same period in 2025. Real estate expense typically includes expenses at our hotel and retail operating properties and land properties. The increase in 2026 was due primarily to one property beginning operations in September 2025 and $0.5 million of expense related to a legal settlement with respect to one of iStar’s (refer to Note 1) legacy assets. This amount was recorded upon settlement due to uncertainty regarding payment, which was contingent on the settlement.
Depreciation and amortization was $2.2 million during the three months ended March 31, 2026 and $1.0 million for the same period in 2025. The increase in 2026 was due primarily to one property beginning operations in September 2025.
During the three months ended March 31, 2026, we incurred $3.3 million of general and administrative expense, primarily resulting from management fees to Safe and director costs. The annual management fee payable to our Manager under the Management Agreement declined from $15.0 million to $10.0 million for the third annual term of the Management Agreement which ended on March 31, 2026, and further declined to $7.5 million for the annual term ending March 31, 2027. During the three months ended March 31, 2025, we incurred $4.7 million of general and administrative expense, primarily resulting from management fees to Safe and director fees. The decrease in 2026 was due primarily to a decrease in management fees.
The provision for loan losses was $0.4 million for the three months ended March 31, 2026 as compared to a recovery of loan losses of $0.1 million for the same period in 2025. The provision for loan losses for the three months ended March 31, 2026 resulted primarily from a $0.5 million charge-off on a loan that was repaid. The recovery of loan losses for the three months ended March 31, 2025 resulted primarily from a partial repayment on a loan during the period and an improving economic forecast.
Other expense was $0.4 million during the three months ended March 31, 2026 and $3 thousand for the same period in 2025. Other expense for the three months ended March 31, 2026 resulted primarily from a loss on deconsolidation of a venture (refer to Note 5 to the consolidated financial statements).
Unrealized gain (loss) on equity investment represents the unrealized gain or loss on our Safe Shares. We account for our Safe Shares as an equity investment under ASC 321, which requires that we adjust our investment in the Safe Shares to fair value through income at each reporting period. The unrealized loss for the three months ended March 31, 2026 represents the difference between the fair value of our investment in the Safe Shares as of March 31, 2026 and December 31, 2025. The unrealized gain for the three months ended March 31, 2025 represents the difference between the fair value of our investment in the Safe Shares as of March 31, 2025 and December 31, 2024.
Loss on early extinguishment of debt during the three months ended March 31, 2025 resulted from the partial repayment of the Margin Loan Facility.
Liquidity and Capital Resources
Liquidity is a measure of our ability to meet potential cash requirements, including to pay interest and repay borrowings, develop our assets and maintain our operations, make distributions to our shareholders and meet other general business needs. We were formed in 2023 and we have not paid any dividends. We do not expect to pay regular dividends. We intend to make distributions of available cash from time to time, primarily dependent upon our ability to sell assets and the prices at which we sell our assets.
Our sources of cash will be largely dependent on asset sales, which are difficult to predict in terms of timing and amount. While we may be able to anticipate and plan for certain liquidity needs, there may be unexpected increases in uses of cash that are beyond our control and which would affect our financial position, liquidity and results of operations, such
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as prepayments on the Margin Loan Facility resulting from declines in the market value of the Safe Shares. Even if there are no material changes to our anticipated liquidity requirements, our sources of liquidity may be fewer than, and the funds available from such sources may be less than, anticipated or needed. Our primary sources of liquidity will generally consist of our cash on hand and proceeds from asset sales. We expect our short-term and long-term liquidity requirements to include:
| ● | capital expenditures on our Asbury Park Waterfront and Magnolia Green development projects; |
| ● | debt service on the Safe Credit Facility and the Margin Loan Facility (refer to Note 9 to the consolidated financial statements), and any other indebtedness including any repurchase agreements; |
| ● | repayment or refinancing of the Margin Loan Facility and the Safe Credit Facility at their respective maturities; |
| ● | management fees and expense reimbursements payable to our Manager (refer to Note 7 to the consolidated financial statements); |
| ● | operating expenses; and |
| ● | distributions to shareholders if we have excess cash on hand from asset sales after the payment of our debt obligations. |
We expect to meet our short-term liquidity requirements through any cash flows from operations, proceeds from asset sales, borrowings on available debt facilities and our unrestricted cash. We expect to meet our long-term liquidity requirements through any cash flows from operations and proceeds from asset sales and through refinancing maturing debt.
Our future cash sources will be largely dependent on proceeds from asset sales. The amount and timing of asset sales, including the sale of Safe Shares, could be adversely affected by a number of factors, some of which are outside of our control, including the macroeconomic factors discussed below. We cannot predict with certainty the specific transactions we will undertake to generate sufficient liquidity to meet our obligations as they come due. We will adjust our plans as appropriate in response to changes in our expectations and changes in market conditions. The uncertainty related to macroeconomic factors such as inflation, changes in interest rates, market volatility, disruptions in the banking sector, tariff policy, geopolitical uncertainty and the availability of financing, and the effects of these factors on the economy generally and on the commercial real estate markets in which we operate, make it impossible for us to predict or to quantify the impact of these or other trends on our financial results or liquidity.
The following table outlines our cash flows from operating activities, cash flows from investing activities and cash flows from financing activities for the three months ended March 31, 2026 and 2025 ($ in thousands):
| | | | | | |
| | For the Three Months Ended March 31, | ||||
| | 2026 | | 2025 | ||
Cash flows provided by (used in) operating activities | | $ | (8,398) | | $ | (6,326) |
Cash flows provided by (used in) investing activities | | | 626 | | | (8,276) |
Cash flows provided by (used in) financing activities | | | 2,659 | | | 12,089 |
The increase in cash flows used in operating activities during 2026 was due primarily to a real estate property beginning operations in the second half of 2025. The increase in cash flows from investing activities during 2026 was due primarily to a decrease in capital expenditures on land and development assets, an increase in proceeds received from sales of land and development assets, which was partially offset by the purchase of other lending investments and the deconsolidation of a venture in 2026. The decrease in cash flows provided by financing activities during 2026 was due primarily to a net decrease in borrowings on debt obligations and the repurchase of common stock in 2026.
Debt Covenants—The Margin Loan Facility requires that we comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, indebtedness, liens, investments and the payment of dividends. Additionally, the Margin Loan Facility includes customary representations and warranties, events of default and other creditor protections for this type of facility. Upon the occurrence of certain events which are customary for this type of facility, we may be required to prepay all amounts due under the Margin Loan Facility or post additional collateral in accordance with the Margin Loan Facility and related agreements. As part of the amendment to the Margin Loan Facility
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that we entered into on March 28, 2025, the loan-to-value ratios that would require us to post additional collateral with the lender or permit us to request a release of collateral were eased from then existing levels.
The Safe Credit Facility requires that we comply with various covenants, including, without limitation, covenants restricting, subject to certain exceptions, indebtedness, liens, investments, mergers, asset sales and the payment of certain dividends. Additionally, the Safe Credit Facility includes customary representations and warranties as well as customary events of default, the occurrence of which, following any applicable grace period, would permit Safe to, among other things, declare the principal, accrued interest and other obligations of ours under the Safe Credit Facility to be immediately due and payable and foreclose on the collateral securing the Safe Credit Facility.
As of March 31, 2026, we were in compliance with all of our financial covenants.
Critical Accounting Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments in certain circumstances that affect amounts reported as assets, liabilities, revenues and expenses. We have established detailed policies and control procedures intended to ensure that valuation methods, including any judgments made as part of such methods, are well controlled, reviewed and applied consistently from period to period. We base our estimates on historical corporate and industry experience and various other assumptions that we believe to be appropriate under the circumstances. For all of these estimates, we caution that future events rarely develop exactly as forecasted, and, therefore, routinely require adjustment.
For a discussion of our critical accounting policies, refer to the combined and consolidated financial statements of our 2025 Annual Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market Risks
Market risk is the exposure to loss resulting from changes in interest rates, commodity prices and equity prices. In pursuing our business plan, the primary market risk to which we are exposed is interest rate risk. Our operating results will depend in part on the difference between the interest and related income earned on our assets and the interest expense incurred in connection with our interest-bearing liabilities. Changes in the general level of interest rates prevailing in the financial markets will affect our floating liabilities. Any significant increase in interest rates on our interest-bearing liabilities could have a material adverse effect on us. There can be no assurance that our profitability will not be materially adversely affected during any period as a result of changing interest rates.
In the event of a significant rising interest rate environment or economic downturn, defaults could increase and cause us to incur additional credit losses which would adversely affect our liquidity and operating results. Such delinquencies or defaults would likely have a material adverse effect on the spreads between interest-earning assets and interest-bearing liabilities. In addition, an increase in interest rates could, among other things, reduce the value of our fixed-rate interest-bearing assets and our ability to realize gains from the sale of such assets.
Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control. We monitor the spreads between our interest-earning assets and interest-bearing liabilities and may implement hedging strategies to limit the effects of changes in interest rates on our operations, including engaging in interest rate swaps, interest rate caps and other interest rate-related derivative contracts. Such strategies are designed to reduce our exposure, on specific transactions or on a portfolio basis, to changes in cash flows as a result of interest rate movements in the market. We do not enter into derivative contracts for speculative purposes or as a hedge against changes in our credit risk or the credit risk of our borrowers.
The following table quantifies the potential changes in annual net income, assuming no change in our interest earning assets or interest-bearing liabilities, should interest rates decrease or increase by 10, 50 or 100 basis points, assuming no
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change in the shape of the yield curve (i.e., relative interest rates). Actual results could differ significantly from those estimated in the table.
Estimated Change In Net Income
($ in thousands)
| | | |
Change in Interest Rates | | | Net Income(1) |
-100 Basis Points | | $ | 307 |
-50 Basis Points | |
| 154 |
-10 Basis Points | | | 31 |
Base Interest Rate | |
| — |
+10 Basis Points | |
| (31) |
+50 Basis Points | |
| (154) |
+100 Basis Points | |
| (307) |
| (1) | As of March 31, 2026, we had $92.8 million principal amount of floating-rate debt obligations outstanding and $62.1 million of cash and restricted cash. |
Item 4. Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company has formed a disclosure committee that is responsible for considering the materiality of information and determining the disclosure obligations of the Company on a timely basis. The disclosure committee reports directly to the Company’s Chief Executive Officer and Chief Financial Officer.
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the disclosure committee and other members of management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) or Rule 15d-15. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.
There have been no changes in the Company’s internal control over financial reporting during the period covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and/or one or more of its subsidiaries is party to various pending litigation matters that are considered ordinary routine litigation incidental to the Company’s business as a finance and investment company focused on the commercial real estate industry, including foreclosure-related proceedings. The Company believes it is not a party to, nor
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are any of its properties the subject of, any pending legal proceeding that would have a material adverse effect on the Company’s consolidated financial statements.
Item 1A. Risk Factors
There were no material changes from the risk factors previously disclosed in our 2025 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Issuer Purchases of Equity Securities
| | | | | | | | | | |
| | | | | | | Total Number of Shares | | Maximum Dollar Value | |
| | | | | | | Purchased as Part of a | | of Shares that May Yet | |
| | Total Number of | | Average Price | | Publicly Announced | | be Purchased Under the | ||
| | Shares Purchased | | Paid per Share | | Plan | | Plans | ||
January 1 to January 31 |
| 216,555 | | $ | 8.47 |
| 216,555 | | $ | 164,614 |
February 1 to February 28 |
| 12,434 | | $ | 7.85 |
| 12,434 | | $ | 67,007 |
March 1 to March 31 |
| 7,437 | | $ | 9.01 |
| 7,437 | | $ | — |
| (1) | On March 31, 2025, the Company announced that its board of trustees authorized a share repurchase program that permits the Company to repurchase up to $10.0 million of its common shares in open market purchases, privately negotiated transactions or otherwise, including pursuant to one or more trading plans. Through March 2026, the Company utilized the full authorization under the share repurchase program. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
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Item 6. Exhibits
INDEX TO EXHIBITS
| | |
Exhibit | | Document Description |
31.0 | | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act |
32.0 | | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act |
101.INS | | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document |
101.SCH | | Inline XBRL Taxonomy Extension Schema Document |
101.CAL | | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF | | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | | Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | | Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) |
* | In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Exchange Act of 1934 and otherwise is not subject to liability under these sections. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | |
| Star Holdings | |
| | |
Date: | May 8, 2026 | /s/ JAY SUGARMAN |
| Jay Sugarman | |
| Chief Executive Officer (principal executive officer) | |
| | |
| | |
| | |
| | |
| | |
| Star Holdings | |
Date: | May 8, 2026 | /s/ BRETT ASNAS |
| Brett Asnas | |
| Chief Financial Officer | |
| (principal financial officer) | |
| | |
| | |
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